A survey into the use of derivatives by large non‐financial firms operating in Belgium

Ceuster, Marc J.K. De; Durinck, Edward; Laveren, Eddy; Lodewyckx, Jozef

doi:10.1111/1468-036x.00126

Cited by 67 publications

(45 citation statements)

References 9 publications

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“…In a follow-up survey seven years later, it was found that the rate of derivative use had increased to 59% of firms (Alkeback, Hagelin and Pamborg, 2006). In a survey of derivative use by large Belgian firms, De Ceuster, Durinck, Laveren and Lodewyckx (2000) found that 66% of firms use derivatives. In the Netherlands, it was found that 60% of Dutch firms use derivatives (Bodnar, de Jong and Macrae, 2003).…”

Section: Review Of Prior Surveysmentioning

confidence: 99%

“…Belgian firms mainly hedge currency risk, both current contractual obligations and anticipated transactions up to one year as well as interest rate risk. Only 16% of firms hedge commodity risk (De Ceuster, Durinck, Laveren and Lodewyckx, 2000).…”

Section: E the Reasons Companies Use Derivativesmentioning

confidence: 99%

“…The 1995 Wharton School survey of derivative usage in the USA (Bodnar, Hayt, Marston, and Smithson, 1995) gave rise to further surveys Marston, 1996 andMarston, 1998). The Wharton School surveys led to similar surveys of corporate derivative usage in other countries such as Sweden Hagelin, 1999 andPramborg, 2006) , Germany (Bodnar and Gebhardt, 1999), Netherlands (Bodnar, Hayt, de Jong and Macrae, 1995), Belgium (De Ceuster, Durinck, Laveren, and Lodewyckx, 2000), the United Kingdom (Mallin, Ow-Yong, andReynolds, 2001 andEl-Masry, 2006), Australia (Berkman, Bradbury, Hancock, andInnes, 2002 andBenson andOliver, 2004), and New Zealand (Berkman, Bradbury and Magan, 1997). These studies employed a similar methodology and questionnaire.…”

Section: Introductionmentioning

confidence: 99%

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The corporate use of derivatives: a survey of South Africa’s large listed non-financial firms

Correia

Holman

Jahreskog

2012

South African Journal of Accounting Research

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This paper presents the results of a comparative questionnaire survey of derivative use by South African companies. The objective was to determine the extent of derivative use and to examine how and why companies use derivatives. Derivative use by South African companies compares favourably to the level of derivative use in developed countries. The risk most often hedged is currency exposure followed by interest rate risk. Commodity producers tend to hedge commodity price risk. Companies mainly use forwards to hedge exchange rate risk whilst swaps dominate in the hedging of interest rate risk. Companies mainly use derivatives to hedge contractual obligations and rarely use derivatives to take a view on market movements. Concerns relate to transaction costs, investor perceptions, and credit and liquidity risks. Companies indicated that they would, if permitted, hedge expected as compared to actual future currency exposure. KEY WORDSDerivatives, hedging, currency exposure, interest rate risk, forwards and swaps Contact arete@telkomsa.net and carlos.correia@uct.ac.za

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Section: Review Of Prior Surveysmentioning

confidence: 99%

Section: E the Reasons Companies Use Derivativesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The corporate use of derivatives: a survey of South Africa’s large listed non-financial firms

Correia

Holman

Jahreskog

2012

South African Journal of Accounting Research

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“…In a number of recent survey studies, additional countries have been studied, such as New Zealand (Berkman, Bradbury and Magan, 1997), Sweden (Alkebäck and Hagelin, 1999), Germany (Gebhardt and Russ, 1999), Belgium (De Ceuster, Durinck, Laveren and Lodewyckx, 2000), UK (Mallin, Ow-Yong and Reynolds, 2001) and Switzerland (Loderer and Pichler, 2000). This paper investigates derivative use in risk management of firms in the Netherlands and compares it with the established evidence from firms in the US.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Institutional Differences on Derivatives Usage: a Comparative Study of US and Dutch Firms

Bodnar

Jong

Macrae

2003

Euro Fin Management

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This paper tests the influence of institutional differences on risk management practices. Several survey studies have investigated derivatives usage for risk management purposes in the US (see, among others, Bodnar, Hayt, Marston and Smithson, 1995and Bodnar, Hayt and Marston, 1996. In this paper, we compare derivative practices of US and Dutch firms. This comparison is interesting because the institutional setting for Dutch firms differs from the US setting with respect to shareholder orientation, international trade, disclosure regulation, and the reliance on financial markets. In a number of survey studies additional countries have been studied, such as New Zealand (Berkman, Bradbury and Magan, 1997), Sweden (Alkebäck and Hagelin, 1999) and Germany (Bodnar and Gebhardt, 1999). In contrast with these papers, we facilitate a comparison by applying a matching and a weighting strategy, which corrects for different distributions over industry and size classes in the Dutch and US samples. After these corrections, the remaining results can be attributed to institutional differences. We find that Dutch firms hedge more financial risk. Because of the greater openness of the Netherlands, Dutch firms experience far more foreign exchange exposure and hedge more currency risk. US firms have more concerns regarding derivative usage, which may be linked to the stricter disclosure requirements in the US. US firms also focus more on accounting earnings, which may be attributable to the shareholder orientation in the US versus the stakeholder orientation in the Netherlands. Whereas Dutch firms tend to rely on OTC-transactions, US firms use exchange-traded derivatives and therefore require a higher counter party rating for derivatives transactions. This distinction can be accredited to the differences in the financial environments between the US and the Netherlands. The aforementioned results indicate that institutional differences between the US and the Netherlands have a significant effect on the risk management practices and derivatives use of US and Dutch firms. JEL classification: F30; G15; G32

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“…Supporting this, the empirical results of study by Chang [19] pointed out how hedging will play an effective role in helping corporations to manage adverse outcomes of exchange rate risks. The surveys of the past study such as Bodnar and Gebhardt [20]; Bodnar et al [21]; Prevost et al [22]; De Ceuster et al [23] suggests that, firms actively manage FX risk using internal and external (derivatives) instruments. Then again, there are no real long term derivatives available (except currency swaps) to hedge the economic exposure.…”

Section: Literature Reviewmentioning

confidence: 99%

Exchange Rate Exposure of Indian Firms Using Capital Market Approach

Prasad¹,

Kr²

2016

J Account Mark

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The unintuitive movement in the exchange rates will expose the firms involved in international trade to exchange rate exposure. The exchange rate exposure cannot be eliminated; however, it can be effectively managed. Currency derivatives are extensively used to manage the short term exposures and strategic decisions to manage the long term exposures. The past researches conducted on exchange rate exposure management indicate that managing the exchange rate exposures will increase the value of the firm. Therefore, no firms involved in global trade could afford to demine the importance of managing exchange rate exposures. The present research attempts to measure the level of exchange rate exposure of the firms in India. A sample of 76 non-financial companies listed in CNX100 index of NSE was selected as sample and the data for a period of one year is being studied. The results of the study are 21 percent of the sample firms are significantly exposed to foreign exchange risk out of which 25 percent had positive coefficients and 75 percent of the firms had negative coefficients. 57 percent of the firms from Software and IT industry and 15 percent of the firms from mining, refinery and petroleum industry were significantly exposed to foreign exchange risk. JEL Code: F31

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A survey into the use of derivatives by large non‐financial firms operating in Belgium

Cited by 67 publications

References 9 publications

The corporate use of derivatives: a survey of South Africa’s large listed non-financial firms

The corporate use of derivatives: a survey of South Africa’s large listed non-financial firms

The Impact of Institutional Differences on Derivatives Usage: a Comparative Study of US and Dutch Firms

Exchange Rate Exposure of Indian Firms Using Capital Market Approach

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